DFC Intelligence sees core gaming sector doing even better than expected as more crossover between consoles and PC occurs

Research firm DFC Intelligence, in advance of its next brief looking at forecasts for the substantial expected growth of spending among core gamers across all major platforms, has shared some key points exclusively with GamesIndustry International. DFC has now raised its internal forecast for the global PC gaming market this year from $22 billion to $25 billion.

DFC analyst Jeremy Miller said that "core gamers seem to be willing to spend more money than ever." While Asia remains a big contributor to the market, interestingly DFC found that core PC gameplay in the West increased in 2013 versus 2012, and the firm expects 2014 to be strong as well.

"We thought with the lack of major new releases that overall usage would be down," said Miller. "However, the top titles of 2012 continued to do well in 2013 and new titles like Battlefield 4 and Total War: Rome II had solid performances." League of Legends remained the number one PC title in 2013, followed by Dota 2, which actually had the most growth in 2013. DFC said that new versions of popular sports titles like FIFA 2014 also did very well.

"We actually think the launch of the new console systems will help lift the PC game business because there is large overlap between console and PC gamers"

David Cole

Free-to-play continues to be a huge factor in the PC games market's growth, but DFC found that upfront payments are working well too.

"The big surprise is that an upfront payment business model still seems to do very well. Dota 2 charged a $30 beta fee before going free-to-play and a great deal of people took advantage of that. So really we see a hybrid business model working where you can call it F2P but still charge upfront," explained DFC's David Cole.

"Also the traditional model where you charge a one-time fee is also very attractive....but again there is now a greater ability to upsell consumers after the initial purchase. We think this is a major driver of growth versus the pure free-to-play games."

The success of League of Legends and Dota 2 reinforces another trend DFC observed: the domination by MOBA titles. DFC noted that the MOBA genre is "far and away the largest because of those two games" whereas MMOGs are on the decline (see chart below) and first-person shooter games actually surpassed them on the PC in 2013.

Ultimately, the big trend to watch out for this year is the blurring of platforms between the new consoles and the PC.

"One of the big things to watch is the crossover between big console games and their PC release. GTA V releasing for PC will be one to watch if that occurs. Titanfall, Elder Scrolls Online and many other titles are being developed for both console and PC. So I think the biggest item of note is the synergy now between console and PC," Cole added.

"2013 was a slow year for releases on the PC in large part because developers were gearing up for new console systems. We actually think the launch of the new console systems will help lift the PC game business because there is large overlap between console and PC gamers and it becomes another platform for developers."

DFC estimates the addressable market for high-end gamers outside of Asia to be 285 million people. That is the target market for both PC and console gamers who overlap heavily.

The DFC Intelligence brief will be released on February 11 and will be available for free to readers of GamesIndustry International who signup here (be sure to check the box for GamesIndustry International).

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As Asia continues to extend its majority share in the worlds' games market, the PC as platform continues to show healthy growth. For more data and trends on this topic I would suggest downloading our free PC Gaming trend report: PC Gaming. Power to the People that we put out end last year and has comparable figures as DFC is now putting out. www.newzoo.com/pcreport.

How many years have we heard about PC Gaming dying? And ALL along it was because there was no clear distinction between traditional boxed retail and online, and really, mechanisms to track the revenue (and few seemed willing to guess). I'm really hoping I'll stop seeing reports that retail has continued to shrink... it's no more relevant than reporting that fax machine sales have slowed.

Being a distributor in Asia I know that we are just taping into the formidable potential of the PC market. If the level of piracy goes down to half of what it is now (and it will) we will see stunning figures. The figures we have for MMOs subscriptions are here to prove it.

I would agree with Jordan. I don't even see a top ten charting authority for PC game sales and the decentralised nature of PC gaming means that if I make a game tomorrow, put it on my web site and sell 1m copies, there probably won't be anyone to actually take that into account in Gartner or Microsoft's approximation. This problem results in a lot of approximation.

Edited 1 times. Last edit by Andrew Ihegbu on 30th January 2014 5:27pm

I'd encourage readers to pay attention to what DFC is saying here; as well as Peter's (NewZoo's) & Chris Taylors comments.
Several things going on:
1) Free to Play/Microtransaction based gaming is driving a *ton* of this growth. DFC/NewZoo etc get this. Very few if any so called AAA ISVs pubs paid attention in the W. Hemisphere. Now a lot of them are turning into acquisition targets. Did you know that 90% of the MnA in gaming last year was the East buying out, or buying into Western Game ISVs? Aside from Japan...Consoles are largely irrelevent in China, S. Korea, etc. We have to ask ourselves..who is cash rich right now & why?
2) PC Definitions need to evolve as the PC form factor/s have evolved. PC's used to look like Server farms. Tomorrow they will be your SmartPhones. Tablets are the new bright shiny "PC" object. Why? Because we keep shrinking the ingredients, and companies like Apple are great at leading by showing others on how to converge 'computing' devices.
3) Gartner vs DFC? Apples & Oranges. I'm putting my money behind DFC on this one as Gartner didn't track the gaming industry as diligently IMO. I've followed Gartner for 14+ years now. They have good data... but need improvement in this sector IMHO.
4) Msft reporting on the Console industry. <LOL> I used to work there. I knew what they sold/didn't. A shame they don't release margin info on top of that. They blew it on Windows PC gaming. They'll likely pursue the sunk cost fallacy of Xbox to the watery depths. Free to play will likely be the nail in the coffin for them if for any reason a AAA ISV can't sustain F2P on such low install bases of a Console as compared to the PC market. You would never get ~75M reg World of Tanks, LoL, Farmville, etc players on the lower install base/s of an Xbox 360, Wii, or PS3 for example. (Remember - there are now ~6 Consoles or .exes now all vying for the same pie. Discussing Consoles as 1 market is like saying Detroit Auto Industry; which in my books is a big wtfbbq moment)
5) For the record. PC does not always = Windows. Do we really care what OS is powering a PC? Just as long as it's firing up the Software Applications (e.g. Games) that we know & love, is stable, etc - is what really matters. Let's not confuse the form (Tablet/SurfacePro, Laptop, SteamMachine, etc) with the function of a PC.
6) Steam. For all their growth... let's not forget about all the other Games as a Services Portals. We have EA's Origin, BattleNet, etc... all the way to things like Club Penguin. If another player like Amazon decides to get in the game with a Kindle/Console hybrid running Android or the equivalent - this is going to make the battle for the Living room just that much more interesting. Make F2P & Digital Services just that much more important. We're in for a wild ride in our industry over the next ~36 months.

Ultimately... we have to track what platforms the primary time/money is being spent & transacted. $25B for PC this year is very plausible. We'll also likely continue to see more & more 'formerly' known as PC games content being ported to Android, SteamOS, etc. We can defintely expect the 'specs' of mobile devices (Things w/Batteries in them) continue to get better, faster, smaller, lighter, and thinner.

Still thinking about most of those points of your's, Matt, but this one is interesting:

2) PC Definitions need to evolve as the PC form factor/s have evolved. PC's used to look like Server farms. Tomorrow they will be your SmartPhones. Tablets are the new bright shiny "PC" object. Why? Because we keep shrinking the ingredients, and companies like Apple are great at leading by showing others on how to converge 'computing' devices.

There's two ways to approach this. One is the standard argument - mobile will never have enough computing power to work as a PC, and even if it does, it'll be so warm it melts your pocket, blah blah... Everyone knows that argument. :)

The other one is something that's only recently occured. Streaming to mobile and tablet devices. There's a recent RPS article where they test out the Steam In-Home Streaming Beta, and one of the guys streams the latest Might and Magic game from his gaming PC to his Surface Pro. And it was perfectly playable. Sure, there was lag when he tried DayZ, but with certain genres, tablets will be an interesting convergance point.

Edited 1 times. Last edit by Morville O'Driscoll on 31st January 2014 7:00am